10-Q · May 5, 2026
Huntington Ingalls Industries (HII) reported Q1 2026 results with revenues of $3.1 billion and EPS of $3.79, surpassing consensus estimates of $3.02 billion in revenue and $3.72 in EPS. Revenue increased by 13%…
Earnings analysis · 10-Q
HII earnings analysis
Filed October 29, 2026 · Our reading of the company's report
The latest report
HII delivered strong third-quarter results, with revenue up 11% year over year to $3.537 billion, operating margin expanding to approximately 7.0%, and EPS of $5.48 beating consensus by $1.06. Newport News and Mission…
Read full summary
HII delivered strong third-quarter results, with revenue up 11% year over year to $3.537 billion, operating margin expanding to approximately 7.0%, and EPS of $5.48 beating consensus by $1.06. Newport News and Mission Technologies drove the earnings improvement, although Ingalls profitability declined and cash conversion remained weak, with nine-month free cash flow of negative $182 million. The $86.181 billion backlog and approximately $43.1 billion of nine-month awards support the outlook, but government funding uncertainty, inflation, execution risk, and capacity-related capital spending remain important risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $5.48
What stood out
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Revenue and operating income accelerated
Sales and service revenue was $3.537 billion, up $345 million, or 11%, from $3.192 billion in Q3 2025 and up approximately 3% from $3.42 billion in Q2 2026. Operating income rose 53% year over year to $246 million from $161 million.
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Margins expanded materially
Gross margin was approximately 13.6%, based on $3.537 billion of revenue and $3.057 billion of cost of sales, versus 12.3% in Q3 2025 and 12.6% in Q2 2026. Operating margin increased to approximately 7.0% from 4.7% year over year and 5.5% sequentially.
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EPS beat and improved
Diluted EPS was $5.48, exceeding the $4.42 consensus estimate by $1.06, and increased from $3.68 in Q3 2025 and $5.27 in Q2 2026.
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Newport News drove earnings growth
Newport News was the primary growth driver: revenue increased 18% to $1.910 billion and segment operating income increased 65% to $132 million, supported by higher submarine and aircraft-carrier volumes and Virginia-class contract adjustments and incentives.
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Mission Technologies profitability surged
Mission Technologies revenue was broadly stable at $792 million, up 1%, while segment operating income more than doubled to $71 million from $34 million, helped by a successful milestone, Unmanned Systems volume, and higher nuclear and environmental joint-venture equity income.
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Backlog and awards strengthened
Total backlog reached $86.181 billion at September 30, 2026, versus $53.139 billion at December 31, 2025. Nine-month contract awards were approximately $43.1 billion, primarily from nine Virginia-class and five Columbia-class submarines.
What to watch
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Working capital pressured cash generation
Nine-month operating cash flow fell to $99 million from $546 million, while nine-month free cash flow was negative $182 million versus positive $284 million in the prior-year period. Management attributed the decline to a $739 million unfavorable trade-working-capital impact driven by billing timing.
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Ingalls margin and income weakened
Ingalls segment operating income declined 9% to $59 million from $65 million despite 6% revenue growth to $876 million. Management attributed the decline primarily to lower performance in surface combatants.
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Government funding remains uncertain
The U.S. government was operating under a Continuing Resolution funding operations through December 11, 2026, while fiscal 2027 appropriations had not been finalized. The company states that substantially all of its $86.181 billion backlog is comprised of U.S. Government orders, creating exposure to funding delays and customer-priority changes.
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Inflation and execution risk persist
Management expects continued cost inflation for raw materials, components, and supplies and warns that long-term inflation could exceed cost assumptions or impair resource availability. Nine-month cost of product sales increased 17% to $5.802 billion, while nine-month product revenue increased 17% to $6.712 billion.
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Capacity investment raises cash demands
Capital expenditures are expected to rise as the company expands shipbuilding capacity; 2026 maintenance and sustainment spending is expected at 1.0%-1.5% of annual revenue and discretionary spending at 2.5%-3.0%. This investment will compete with cash deployment while nine-month free cash flow remains negative $182 million.
Management's outlook
The 10-Q does not provide numeric revenue or EPS guidance. Management expects 2026 maintenance and sustainment capital expenditures of approximately 1.0%-1.5% of annual revenue and discretionary capital expenditures of approximately 2.5%-3.0%, with capital expenditures expected to increase for shipbuilding-capacity expansion. The filing also states that approximately 22% of the $53.1 billion backlog at December 31, 2025 is expected to convert into 2026 sales.
Earlier filings 4
10-K · February 5, 2026
HII reports a stronger 2025 with Q4 revenue of $3.48B and diluted EPS of $4.04, and full-year revenue of approximately $12.48B (sum of quarterly results). The company highlights exclusive positions in carrier RCOH and…
10-Q · October 30, 2025
HII reported Q3 sales and service revenues of $3,192 million and diluted EPS of $3.68, both beating consensus. Revenue rose year-over-year (Q3 2025 $3,192M vs Q3 2024 $2,749M) and net earnings increased to $145 million…
10-Q · July 31, 2025
HII reported Q2 revenue of $3,082 million and diluted EPS of $3.86 for the three months ended June 30, 2025. Revenue rose vs. the year-ago quarter ($2,977 million) while operating income and net earnings declined to…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.